To test the hypothesis that c-Myc plays an important role in β-cell growth and differentiation, we generated transgenic mice overexpressing c-Myc in β-cells under control of the rat insulin II promoter. F₁ transgenic mice from two founders developed neonatal diabetes (associated with reduced plasma insulin levels) and died of hyperglycemia 3 days after birth. In pancreata of transgenic mice, marked hyperplasia of cells with an altered phenotype and amorphous islet organization was displayed: islet volume was increased threefold versus wild-type littermates. Apoptotic nuclei were increased fourfold in transgenic versus wild-type mice, suggesting an increased turnover of β-cells. Very few cells immunostained for insulin; pancreatic insulin mRNA and content were markedly reduced. GLUT2 mRNA was decreased, but other β-cell–associated genes (IAPP [islet amyloid pancreatic polypeptide], PDX-1 [pancreatic and duodenal homeobox-1], and BETA2/NeuroD) were expressed at near-normal levels. Immunostaining for both GLUT2 and Nkx6.1 was mainly cytoplasmic. The defect in β-cell phenotype in transgenic embryos (embryonic days 17–18) and neonates (days 1–2) was similar and, therefore, was not secondary to overt hyperglycemia. When pancreata were transplanted under the kidney capsules of athymic mice to analyze the long-term effects of c-Myc activation, β-cell depletion was found, suggesting that, ultimately, apoptosis predominates over proliferation. In conclusion, these studies demonstrate that activation of c-Myc in β-cells leads to 1) increased proliferation and apoptosis, 2) initial hyperplasia with amorphous islet organization, and 3) selective downregulation of insulin gene expression and the development of overt diabetes.